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Employee Classification: Exempt vs. Non-Exempt: What Employers Need to Know

The Fair Labor Standards Act, or FLSA, classifies employees into two groups: exempt and non-exempt. An exempt employee must be salaried and typically has duties that are more vital to a company's operations. Exempt employees are excluded from FLSA minimum wage and overtime laws, while non-exempt employees are considered to be "covered employees" under the FLSA.

The U.S. Department of Labor has published specific definitions that employers should follow in order to properly categorize their employees as exempt or non-exempt. However, in general, exempt employees tend to be executives, professionals, administrative employees, outside sales representatives, or specific kinds of computer professionals. Creating job descriptions that define primary responsibilities and duties for all positions within their companies may help employers with the classification process.

Watch this video for more about classifying employees, then download our free e-book at paychex.com/7-questions for details on this and other important questions that affect employers.

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